Folks, there is a SERIOUS problem in the VERY near future. The US Federal Reserve is BANKRUPT (if I interpret this chart correctly).

At first glance, I was thinking "Wow, that is a huge and drastic change. Perhaps it is an artifact of the data running out on the graph."

Nope.

Let's take a closer look:

That is real data from real numbers, folks. The Federal Reserve is NEGATIVE on the amount of funds available for borrowing. They have overextended themselves in their effort to bail out a bunch of banks that should be punished (allowed to fail) for being irresponsible and greedy WITH YOUR MONEY.

When you put money into a bank, they loan it out to others. You *might* even get a small percentage of the interest they charge the borrowers. Odds are your bank was irresponsible with your money and had to have a little help from the Fed to keep them solvent.

Now look at the Fed (above). Unless these banks (that don't have any money) can pay back the Fed loans, the Fed is and remains empty and insolvent... to the tune of almost 100 BILLION (not a typo) US dollars.

There are further implication for this. If everyone runs to their bank and demands their cash, they won't get it. The coffers are empty.

Amidst all this maelstrom, one must ask if wisdom prevailed during the Clinton Administration to repeal the Glass Steagall Law from the Great Depression era. That law created the Federal Deposit Insurance Corp for insuring individual banks and depositors, up to $100k per account. The law also blocked any attempt to merge banks, brokerage firms, and insurance companies. The legislation intended to protect a meltdown to spread to all critical structural elements of the financial system. With the Glass Steagall repeal, one has to wonder if some destruction was planned, or else a major consolidation was the ultimate goal.

That means there can be no end on the spread of this "contagion".

Incredibly, the bankrupt Federal Reserve has decided to loan more nonexistent money:

WASHINGTON (MarketWatch) -- Acting quickly to prevent a run on major global financial firms, the Federal Reserve cut its discount rate by a quarter percentage point to 3.25% and offered to lend money to a longer list of firms than ever before. [...]

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The system is broke. You don't have any money.

But what about that market rally we have been having? The rally is for suckers.

“We think it is a mistake to chase this rally,” she writes. “The risk is much greater that credit deterioration will accelerate and banks will raise more dilutive equity and cut dividends than expected.” [...]

---What can we do?

The world depends upon the US financial system. As we tank, so do others. But Asia seems to be trying to break away from that model. If they are successful, then I think they will be a good investment. Check out the emerging market funds.